DEFENSE CONTRACT MANAGEMENT AGENCY 3901 A AVENUE, BUILDENG10500 FORT LEE, VA 23801-1809 MEMORANDUM TO: MS. PAMELA CONKLIN, DIRECTOR FINANCIAL AND BUSINESS OPERATIONS DIRECTORATE FROM: KEITH GUDGEL, DIRECTOR, CFO COMPLIANCE DIVISION SUBJ: A. l. B. Report of Suspected and Potential Antideficiency Act (ADA) Violations Accounting classi?cation of funds involved: Suspected violations of 31 USC l34l(a)(1)(A) are for Operations and Maintenance, Defense-Wide Research Development, Testing and Evaluation Procurement, Defense?Wide and Working Capital Fund, Defense (WCF D), Fiscal Years 2013 through 2016. These violations relate to exceeding DCMO-Certi?ed amounts to spend on covered Defense Business Systems (DBS), per implementation guidance of 10 USC 2222. Potential violations of 31 USC 1342 related to employing personal services without authorization would be for all appropriations and years. This would include the same appropriations. Potential violations of 31 USC 1301 (Color of Money) for improper use of funding, particularly for efforts, exists for all years. Name and location of the activity where the alleged violations occurred DCMA HQ, Fort Lee, VA and other DCMA locations C. Approximate amount of the alleged violations in 1,000?s 1. Suspected violations of 31 USC 1341 related to 10 USC 2222: Appn FY13 FY14 FY15 FY16 Total $233 $4,537 $15,459 $5,488 $25,717 $0 $631 $3,880 $0 $4,511 PDW $0 $135 $178 $1,172 $1,485 WCF, Defn $5,072 $846 $0 $0 $5,918 Total $5,305 $6,149 $19,517 $6,660 $37,631 a. These ?gures were obtained arithmetically by comparing DCMA?reported obligations in Select and Native Programming, IT to authorized amounts for covered Defense Business Systems (DBS) in This reporting system contains all budgeted and reported obligations by Unique Investment Identi?er (UII). UIIs that were identi?ed in the FY18 DCMO Certi?cation for covered DBS were considered to have been covered DBS for any costs from The number of certi?ed DBS has grown and changed, but this report assumes that any system that is now a DBS should have been classi?ed as one for the time period beginning FY13. I was unable to obtain a complete and authoritative listing of all DCMO certi?cations for 3-16, but was able to validate that amounts from various DCMO certi?cations in fact matched the data imported from This table excludes any IVWVIS amounts because they are already under formal investigation. b. The systems that reported obligations in excess of certi?ed amounts (or obligations in absence of certi?ed amounts) are: -Competency Management System (CMS) ?Contract Cost Negotiations System (CCNS) ?Contract Management Property Administration System (CMPAS) -Contract Receipt, Review and Routing System (CRR) -Contract Source Selection System ~Contract Writing and Administration System (CWAS) -Contractor Business Analysis Repository (CBAR) ?Earned Value Analysis System (EVAS) -Integrated Contract Surveillance System (ICSS) -Mechanization of Contract Administration Services (MOCAS) ~Modi?cation and Delivery Orders (MDO) -Personnel Accounting and Assignment System (PAAS) ?Portfolio and Asset Management (PAM) ?Property Shipment and Delivery System (PSDS) ?Special Programs Contract Management System -Supply Chain Risk Assessment System (SCRAS) -Talent Management System (TMS) ?Wide Area Work?ow (WAWF) c. The Accountable Property System (APS) and Enterprise Integrated Business Intelligence Toolset (EITS) are not included in this list, but are recommended for review as they had expenditures over the 10 USC 2222 threshold and may be covered DBS. d. Total violations are dif?cult to gauge for FY13. During that time-frame, all obligations for and PDW other than MOCAS were accumulated in the aggregate UII Investment Technical Support?. System-level expenditure data exists for at least FY13 at the U11 level for some contracts. obligations for systems were aggregated in most likely in Sustainment Technical Support? and perhaps lT Plans and Management?. Paper and electronic ?les for these costs may be maintained by Based on this aggregation of expenditure data, and the reported spending in spreadsheets obtained from there are additional suspected ADAs for obligations on covered DBS lacking any DCMO certi?cation in FY13. These include CBAR, MDO and MCC, among others. . No estimate is provided for potential ADA violations related to employing personal services, 31 USC 1342. . No estimate is provided for potential ADA violations related to improper use of ?nding for systems development, rather than . Nature of the alleged Violations Per own reported ?gures in DCMA obligated funds for covered Defense Business Systems in excess of amounts authorized under 10 USC 2222. Beginning in FY13, no funds were authorized to be obligated for a Defense Business System that had costs of over $1,000,000 across the FYDP unless the expenditures were certi?ed by DCMO. This annual certi?cation provides speci?c obligational authority by appropriation for each DBS. Exceeding these amounts, or obligating funds without a certi?cation, is a violation of 31 USC 1341 Please refer to Attachment A, and C. Employing personal services contracts without speci?c authority is a violation of 31 USC 1342. Please refer to Attachment D. As reported on page 2 of Ms. Elizabeth Smith?s Memorandum ?Report of Preliminary Review of Suspected Anti-De?ciency Act Violations Regarding Integrated Workload Management System Contracts?, there was convincing evidence that two speci?c contracts (Discover and Apprio) involved personal services due to broad scopes of work, lack of discrete Performance Work Statements, and DCMA personnel directing contractor performance. She further states on page 14 that efforts to incorporate a PWS on one contract was not acted upon to maintain a ?vague and ?exible scope to preserve the personal services manner in which DCMAIT was accustomed?. In addition, a contracting of?cer erroneously indicated that directing the work of contractors was acceptable by the COR for a ?labor hour contract?. The general lack of effective and COR oversight were also recently con?rmed by the draft Audit Report, ?Defense Contract Management Agency?s Information Technology Service Contracts?. . The ?nal potential violations in this report regard the improper use of for work that should have been ?inded with This would cause a violation of 31 USC 1301, which due to lack of funding would result in an ADA under 31 USC 1517. See attachments and F. While there are no speci?c known examples outside those 1) 2) 3) F. cited for IWMS, Ms. Smith?s describes the lack of oversight by ?nance personnel over IT ?nance and budget (page lack of communication and coordination between ?nance, IT, contracting, and general counsel personnel (page the lack of questions by senior personnel when briefed about development efforts funded by and repeated examples of non-recognition of funding issues by staff personnel who were working with the improper funds (throughout the report). On page 13 Ms. Smith states that the use of for IT development was a practice that was con?rmed by DCMA-IT personnel. Given this observation and the lack of controls, also described in the draft IG report, it is likely that was improperly used for development efforts on other systems and not recognized or suf?ciently questioned. Therefore, an assessment of contracts and program management documents is warranted for at least the covered to identify whether other speci?c instances occurred. Date the alleged Violations occurred and date discovered The alleged violations related to 10 USC 2222 occurred during the time period of FYI 3 through at least substantial research will need to be completed to reconstruct the exact timeline per ?scal year and appropriation. The potential ADA was discovered through analysis by the Turnaround Team approximately December 14, 2017. At that time, the team members working to bring on an ADA formal investigation team for IWMS assumed that these investigators would handle these issues due to their close association. It came to my attention on February 23, 2018 that the neither the ADA investigator nor the DCMA Of?ce of Independent Assessment and Inspector General were looking into these matters. Between now and then I?ve worked as described above to validate ?gures to the extent possible to ensure the spreadsheet data correlates to known source documents, and consider them to be suf?ciently valid to initiate a Preliminary ADA investigation. The alleged/potential Violations relating to the personal services contract are likely to span an unknown but time period through approximately the Procurement Stand- Down. The ADA implications of this situation was made known to DCMA no later than the date of Ms. Smith?s report, September 27, 2017. It is likely that these were known in DCMA prior to this, as evidenced by the DCMA procurement stand-down, which was taken to address some of the underlying procurement issues. The lack of investigation came to my attention on Feb 23, 2018. The alleged/potential violations relating to additional instances of using for development efforts span an unknown period of time through approximately the time of the initial discovery of the potential IWMS ADA. The potential for additional Violations was made known to DCMA no later than the date of Ms. Smith?s report. The lack of investigation came to my attention on February 23, 2018. Means of discovery 1) 2) 1) The Turnaround Team (T2) appointed to review contracting practices in light of various contracting issues was reconciling information technology spend plans to various amounts in the exhibits. This review was informed by the results of the Preliminary Report of an ADA for the Integrated Workload Management System (IWMS). The T2 review identi?ed overspending by Unique Investment Identi?er (UII) compared to authorized amounts; the UIIs included covered Defense Business Systems. The ?ndings were reported to the Director, Financial and Business Operations Directorate (DCMA-FB) and the Director, CFO Compliance Division BL). The personal services issue and potential for additional ?Color of Money? violations were discovered during the Preliminary Investigation conducted by Liz Smith, with additional information provided by the Draft Report on IT contracts and observations by the Turnaround Team. Description of the facts and circumstances of the case, None provided to supplement the information provided above. Anticipated dates of completion of the preliminary review and submission of the report: Completion of the preliminary review is anticipated to be the full 14 weeks after submission of this report, due to the multiple systems, appropriations, ?scal years, contracts, and issues involved. In addition to source documentation, there are manual spreadsheets of costs originated and maintained by that will need to be researched to validate obligations reported in Estimates may need to be prepared for the labor costs of program managers whose labor costs should have been included in obligated amounts; it is not clear if these were included in reported amounts. Estimates or actuals may need to be located or developed for travel, training, or other discrete costs related to the involved. Due to business practice of aggregating requirements for multiple systems in single contracts, reported obligations will need to be validated from source data such as contracts, and derived data established and maintained by This validation will be both for accuracy compared to existing data, and completeness. The accuracy is suspect in particular for FY16, as the costs seem to have been allocated by a formula compared to authorized amounts. Overruns on CMS, CNSS, CMPAS, CRR, CSS, CWAS, CBAR, BITS, ICSS, IWMS, MOCAS, MDO, PAAS, PAM, PSDS, SCRAS, TMS and WAWF are all multiples of $1 12K (such as or Variances in the amounts are unlikely to affect total violations materially, as the DCMO certi?cations are a zero?sum game. Completeness speci?cally relates to whether actual or estimated civilian labor related to systems was included. The review concerning personal services. This would have to be determined as necessary through reviews of the audit report and/or RAND study; multiple statements of work; interviews with Contracting Of?cers, Contracting Of?cers? Representatives, and contractors; relevant meeting notes, emails, or other documents; and other similar evidence. The IWMS Preliminary Investigation highlighted de?ciencies in the process of assigning proper funding to info technology?related procurements. To ensure that all relevant and likely issues are identi?ed in a timely manner, the Preliminary Investigators assigned to review the relevant statements of work for indications of personal services should also review to identify whether potential color of money violations occurred. Including all of these matters in this Preliminary Investigation will ensure that there will be one comprehensive set of ?nancial actions to correct the should they be identi?ed in the case of a follow-on Formal Investigation. The name(s) and work phone number(s) of the preliminary investigator or the members of the preliminary review team. Personnel have not been identi?ed to perform this preliminary investigation at this time. DCMA may obtain the services of a quali?ed investigators by bringing on Rehired Annuitants. Potential candidates were already identi?ed during search for a Formal Investigator for the IWMS ADA. The DCMA Of?ce of Internal Assessment and Inspector General will lead the recruitment and hiring process. The leads for obtaining team members are Mr. Robert Conforto and Mr. Raymond (Alex) Sloss. KEITH R. GUDGEL DIRECTOR, CFO COMPLIANCE DIV DCMA-F BL